Warren Buffett, the legendary Oracle of Omaha, has built his fortune by sticking to a simple but powerful approach to investing: buying quality businesses at fair prices and holding them for the long term.
While he famously focuses on US companies through Berkshire Hathaway, Australian investors can apply the same principles right here on the ASX — and even make use of ETFs to capture Buffett-style returns. Here's how.
Warren Buffett's approach
Buffett's strategy isn't about chasing trends or speculating on the next big thing. Instead, he looks for businesses with durable competitive advantages (aka economic moats), consistent earnings, strong returns on equity, and management he trusts.
He also avoids trading. Warren Buffett's favourite holding period is "forever" — buying companies he believes will grow steadily for decades.
As for price, he doesn't necessarily look for cheap shares. Just a fair price is enough for him. He once stated:
It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price.
Applying this to ASX shares
Some Australian shares fit neatly into this philosophy. You might want to consider the following:
- CSL Ltd (ASX: CSL): A global biotech leader with a wide moat in blood plasma therapies and vaccines, delivering steady growth over decades.
- Coles Group Ltd (ASX: COL): A dominant retailer with resilient earnings, benefiting from the essential nature of its grocery operations.
- Macquarie Group Ltd (ASX: MQG): It has a history of disciplined capital allocation, expanding its global asset management and infrastructure businesses.
These aren't speculative plays; they are established businesses with competitive advantages, which is exactly what Buffett looks for.
Using ETFs
If picking individual stocks feels daunting, investors can take a page from Buffett's own advice. He's repeatedly told most investors to simply buy an index fund and keep adding to it.
For Australians, one ASX ETF in particular aligns closely with Buffett's philosophy: the VanEck Morningstar Wide Moat ETF (ASX: MOAT).
This ETF invests in US companies that have wide economic moats and attractive valuations — essentially pre-screening businesses using the same lens Buffett would.
Pairing the VanEck Morningstar Wide Moat ETF with a broad-market US fund like the iShares S&P 500 ETF (ASX: IVV), and some local quality names, can give you a Buffett-inspired, globally diversified portfolio without the need to analyse hundreds of balance sheets yourself.
Foolish takeaway
Warren Buffett's success hasn't come from timing the market or betting on fads.
It has come from owning quality businesses, staying patient, and letting compounding do the heavy lifting. And there's nothing stop you from doing the same.
